Liberia: Citing Economic Pressures, President Takes 25% Paycut

Following his call to members of the Liberian Legislature to follow his lead and take a reduction in salary, there appears to be no ground swell of support among legislators to the call of the new Liberia President George Weah.

Lawmakers Listening To Address.

Addressing the Legislature on Monday in his first nationwide address, Weah disclosed that he would be taking a 25 % pay cut because of the dire economic situation of the government.

Citing the reality of the declining rate of the Liberian dollar against US currency, he told lawmakers, “Our currency is in free fall; inflation is rising, unemployment is at an unprecedented high and our foreign reserves are at an all-time low.”

Comparatively, the average lawmaker in Liberia makes about $180,000 which are paid in US dollars in addition to other benefits; that breaks down to about $15,000 USD monthly plus benefits for vehicle, vehicle insurance, repair and maintenance, newspaper, workshops, conferences, books, scholarships, housing, office staff, constituency visit, gasoline, internet, local and foreign travel allowance, entertainment, etc.

The average U.S. Representative makes about $174,000 annually plus benefits.

The salaries for law makers compared to the ordinary Liberian is grossly disparate.

Political Subdivision Map of Liberia

In the 2017-2018 National Budget of nearly $564 million, about $295 million was allocated for salaries. In its narrative for the allocation of monies to the National Legislature, the National Budget noted that …”The purpose of the Legislature of the Republic of Liberia, in keeping with the 1986 Constitution of the Republic of Liberia, is to formulate and make laws, ratify treaties, conventions, and make amendments on existing laws and adopt resolutions. This branch of Government serves as representative of the citizens through which their views and demands are addressed.

The National Legislature is cited as providing no information on Objectives or Achievements for 2016-2017 fiscal year.

However, in the 2017-2018 Budget, National Legislature expenditure including salaries are projected for $29,581,158 USD; increased from $26,546,165 in the 2016-2017 budget.

The 2017-2018 budget projected the receipt of external assistance of $688,185 million. The breakdown of this amount were as follows in USD:
$49.7 million as Budget support with $20 million from the International Development Associate, $12.7 million from USAID, $12.7 million dollars from the EU and $4.3 million dollars from Norway. Targeted external assistance was also projected for various sectors of the Liberian government such as the Trust Fund for $17.79 million, Pool fund of $5 million and Project/Program Aid of $568.75 million dollars.

Major categories of Expenditures in the 2017-2018 budget were in recurrent, contingent and Public Sector Investment Plan, Public Administration, Gender Response and State Owned Enterprises. Compensation of employees accounted for 59% of recurrent expenditure.

Liberia’s economic outlook was exacerbated by decline in commodity prices for its iron ore and rubber exports, the impact of the Ebola pandemic in 2014- 2015 and exit of the UN Mission in the country.

Budget FY 2017-2018

The World Bank’s latest overview of Liberia notes that “…Headline inflation averaged 12.4% in the first half of 2017, compared with 7.3% the previous year, driven by the relatively fast pace of the depreciation of the Liberian dollar against the U.S. dollar (of 20% in the first half of 2017 compared to 11% in the same period in 2016). Other factors include excess liquidity in terms of Liberian dollars, and the relative shortage of inflows of foreign exchange. The resultant rise in the cost of living, especially the cost of food, which is mostly imported, increased fiscal pressures. Limited employment continues to undermine the welfare of Liberians in both urban and rural areas..”

The small West African nation of 4 million people is banking on favorable agricultural sector growth in commercial gold and diamond production and expansions to improve its economic growth.

The new administration is yet to lay out its economic strategies for addressing the declining economic outlook and pressures on limited government revenues. President Weah, in his address to lawmakers on Monday, all but admitted that Liberia is “broke”.

According to World Bank, “… Commensurate with GDP per capita growth and single digit inflation, Liberia’s poverty headcount ratio (at the national poverty line) is projected to fall to 45.2% in 2019, compared to 49.8% in 2017.”

Liberia Capitol Building – Seat of National Legislature

According to President Weah, he will submit several legislations and policies to the country’s Legislature intended to spur economic growth, develop and expand agriculture and address the infrastructure needs across the country.

His government, he said, will focus on road construction and the provision of affordable and adequate electricity power.

While expectations are high for immediate solutions to national challenges, some Liberians say they are prepared to give the new administration some time to address the issues.

By Emmanuel Abalo

West African Journal Magazine

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